Gas rate cuts could be coming for homeowners

New Brunswick homeowners paying record prices for natural gas may be entitled to substantial rate cuts for the rest of the winter, according to new documents filed with the New Brunswick Energy and Utilities Board.

The documents, prepared by Enbridge Gas New Brunswick by order of the EUB, show promises made to residential gas customers that their bills would average at least 20 per cent below the cost of electric heat will not be met this year without significant reductions.

Gas and distribution charges would have to be lowered to $17.76 per giga joule for February and March to meet that promise, 30 per cent below the $25.32 the company is charging residential customers in January, the documents state.

Enbridge is facing a full rate hearing in mid-February, but the EUB wants the residential rate question settled long before that and has ordered a special hearing on that issue next Monday.

Other rates would have to increase

The company opposes the cut, saying residential customers are no longer entitled to a full 20 per cent saving on electric heat and that rates for other customers would have to increase.

"Enbridge Gas New Brunswick does not believe it is appropriate to implement [reductions]," it wrote in a letter to the utilities board.

Bills to all natural gas customers have climbed steeply over the past year as supply problems from Boston to Halifax have doubled the cost of gas from last year.

In the past, Enbridge has been required to offset price spikes to consumers by lowering its distribution charges, but the company says changes the Alward government forced on it two years ago have eroded that obligation.

In 2011, the provincial government imposed a number of changes on Enbridge in a bid to lower costs to customers. One change merged residential customers and small commercial customers into one rate group.

Residential customers who did convert factored these expected savings into their decisions to convert.- Robert Knecht, U.S. energy expert

Enbridge contends that because commercial customers pay substantially higher electricity rates than residential customers, the 20 per cent saving on electricity costs has been diluted accordingly.

But not everyone agrees.

U.S. energy expert Robert Knecht, who was hired by public intervener René Basque to offer evidence on various rate changes proposed by Enbridge, says the company made its own promises to residential customers about savings that should be honoured.

"My expectation is that this situation [20 per cent saving] was communicated to residential customers who were considering a conversion as part of EGNB’s sales and marketing efforts, and that residential customers who did convert factored these expected savings into their decisions to convert," wrote Knecht in his evidence to the EUB.

"Based on my experience with this company, my view is that the 20 per cent target discount for residential customers should be retained for those customers," he said.